Delta Plans Big Foray Into Latin America

Jan. 5--Delta Air Lines is throwing down the gauntlet, and it is landing squarely in the lap of Continental Airlines.

"By next summer, we will be the No. 2 carrier to Latin America," Jim Whitehurst, Delta's chief operating officer, declared in a recent interview.

To do that, Delta would have to push aside Continental. Currently second in service to Latin America, the Houston airline is in the midst of its own big international expansion, including some recently added flights to Latin America.

For its part, Delta plans to expand to more than 28 new markets throughout Latin America and the Caribbean by 2006. True, industry analysts point out, Delta is starting from a smaller base than many competitors.

In terms of passengers, Fort Worth-based American Airlines carries far more people to Latin America than any other U.S. airline. In 2004, American carried 12.1 million passengers to Latin America, compared to about 4.8 million for Continental. Delta carried 2.7 million passengers to the region in the same period.

One reason for the push to expand into Latin America is the domestic dominance of Southwest Airlines.

Dallas-based Southwest recently became the leader in terms of passengers carried on domestic routes. Latin America offers a Southwest-free zone for the other major carriers to compete in.

Aviation industry consultant Alan Sbarra noted that most U.S. carriers are on an international expansion binge because there is far less competition and they can charge higher fares. "Latin America is becoming more deregulated, but there still is not a lot of competition in a lot of markets and there is no Southwest competition." Sbarra said.

He said Delta apparently is expanding in Latin America because it is a region the Atlanta-based carrier hasn't penetrated as much.

Latin America, in particular, remains an important focus for a number of U.S. airlines, including Continental. The Houston-based carrier unveiled a "Latinization" program in the late 1990s that featuring a host of bilingual services.

"We take all competition very seriously," Continental spokesman Ned Walker said. "There are some carriers that are trying to catch up to where we are."

Delta is undergoing a pretty big expansion, however, starting seven new Latin American routes between Nov. 17 and Dec. 18 alone. Among the rollouts from its hub in Atlanta were service to Santo Domingo in the Dominican Republic, Barbados, Managua, Nicaragua, Puerto Vallarta in Mexico and Antigua.

All that is part of a restructuring Delta announced last year before it was forced into bankruptcy on Sept. 14 as it battled to wrangle more concessions from its employee unions.

Continental isn't sitting still. It just introduced nonstop flights between Houston and Buenos Aires, Argentina, Continental's ninth destination in South America and its 77th Latin American-Caribbean destination. Continental launched five other new routes to Latin America and the Caribbean in mid-December.

Delta, which already flew to Buenos Aires, has an average of 51 daily flights to Latin America and the Caribbean. But Whitehurst said it has launched a "significant expansion" into Mexico, asking for approval for service for more than 15 new routes from the U.S. Department of Transportation.

Sbarra questions some aspects of Delta's big foray into Latin America, at least based on geography. American has a hub in Miami, which is a true gateway to Latin America, and both Houston and Dallas already are big gateways based on location.

"Those are just natural, strong cities with strong communities of interest to Latin America, just natural places that people want to fly to," he said. "Atlanta is not Miami and it is not Houston and not Dallas in terms of a destination. Delta seems to be stretching it a little bit here."

Nevertheless, Delta has a "fair number" of international aircraft it can still tap, according to Whitehurst. It recently has made changes domestically, including dropping a significant number of routes where it can use the large aircraft from those routes to fly internationally, he said.

The fact that it reached a new deal for more cuts from its pilots several weeks ago also works in Delta's favor, said Anthony Sabino, an airline industry expert and professor at the Peter J. Tobin School of Business in New York.

"The market for pilots and other airline professionals is soft, and that's an understatement," Sabino said. "They played it down to the wire, but there is still hope for Delta, and we will see what happens next few months."